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schlosstein without messing it up. >> the only thing i would say is, we're in a critical point, and what we truly need is for everyone to gather together and to do a large deal. >> and rise above. >> that's ha the country needs. >> during this christmas season, my heart goes out to the families in newtown, connecticut. >> yep. >> we're all hugging our children a little more tightly this season. >> and everything's on the table. >> as an outdoorsman, i think we need to completely rethink guns in america. >> i think we need to protect our kids at the school, though. everything's on the table. >> our thoughts and prayers are with the families in newtown. >> thank you both very much. right now it's time for "squawk on the street." good morning. welcome to "squawk on the street." which debuted on cnbc's seven
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years ago today. happy anniversary to us. i'm melissa lee with carl and jim cramer and david faber live from the new york stock exchange. let's look at how we're setting up after yesterday's rally. particular strength in yesterday's rally. we didn't get housing starts, that's earlier today. as for the picture in europe, really the stand outout here is the euro. greece getting a five notch upgrade at the s&p. our road map this morning starts with gm. government motors no more. the treasury to exit its stake in the next 12 to 18 months, purchasing 2 million shares by the end of this month. >> another challenging quarter for fedex with the blame squarely on sandy. but the stock is up pre-market. >> oracle posts a strong quarter with even stronger guidance. the season rebound in europe. no impact from the fiscal cliff.
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>> and ge gets boosted from ubs's key call list on the weaker than expected macro environment. still on the list is including -- well tell you in a couple of minutes. >> general motors is up sharply in the pre-market session. the treasury department says it intends to sell the rest of its stakes in gm in the next 12 to 15 months. the automaker will buy back 200 million shares from treasury for $27.50 a share. treasury says it plans to sell its other remaining shares through various means in an orderly fashion. timothy masssad will join us later. this could be a buy signal with the government signaling it is in fact out. >> i think people are looking at what happened with aig, and saying, once you get rid of the overhang, it's off to the races. i know tim's a classmate of mine
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at law school. he said, listen, we'll do our best to be able to get out and not bang the people who bought it at the ipo. still, it's a premium. i think the premium is the government doing well. and i think it does help all the remaining shareholders. >> it's also a theme we're starting to hear more about, which is the return of capital theme. when you are opened in part by the government or regulated highly by the government, ala the banks, you have not been able to return all the capital. with what we're hearing about the banks for next year, in terms of their ability under -- their ability to return or increase dividends and potentially repurchase more shares. and then today with gm. a company that had enormous amounts of cash on its balance sheets. after the government bailout it was ready for armageddon. it didn't come. it's been sitting there -- they weren't able to earn any on the part of cash for liquidity.
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why not, shrink the cap, increase earnings per share. shareholders have been waiting. >> they just added credit lines last month. it will be interesting to see what other shackles come off. are corporate jets back, are executive compensations back, rules that we know were a source of friction between treasury and management. >> don't get too giddy, though, immediately for shareholders, it reduces the shares outstanding by 11%. reduce the shares, of course, increases your earnings per share. maybe that's why in part the stock is trading higher today. >> seems like a rational response. >> oh, yeah. >> i spoke to a couple of shareholders who had been in there because of this story. we're expecting it to perhaps be a bit higher than it is this morning. >> the one thing i would point out is there is a air of good feeling for a lot of these stocks. johnson this morning announced better than expected earnings.
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ford motor said if we could cut back europe, we would have a dramatic increase in earnings. gm is a couple quarters behind ford. but these are powerhouses. you've got to go back to -- if you go back to the old days before gm got in trouble, when the balance sheet got distended, you had a company that had gigantic earnings power. it could happen again. i think people are saying, give me a proxy for world growth. china coming back. gm rationalizing europe. >> gm europe, when you say a couple quarters behind ford, are you saying progress in the quarterly financials? >> committed to rationalizing europe. >> again, a larger theme of excess capitalization at u.s. corporations, and the fact that so much money is sitting on balance sheets doing nothing. >> did you read oracle? how much money do they have. they bought back 10 billion worth of stock.
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these companies, you read through their stories, and you say, not only did they not extend themselves during this downturn, they conserved a lot of cash. by the way, humans did, too, in america. have you seen the numbers that the federal reserve put out last night about how much money is being -- how little debt is being taken down by citizens. we're back to levels of the '90s. federal household debt service came out last night. the percentage of disposable income is 14%, down to 10%. that's 1994 levels. >> that's a big part of morgan stanley's call on citi today. from overweight to equal weight. consumer deleveraging in their view coming to an end. and the more clarity on regulations. we are exiting this really weird period of uncertainty. rules come into focus. and if these consumer balance sheet numbers are right. next year could look different,
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jim. >> yes. there are a lot of assets -- look, a lot of bad loans that are becoming good loans. citi was always relatively opaque. i tried many, many times to penetrate citi holdings, which is the legacy of the core running it now. it may be good. i mean, pandit always promised me the money in holdings was money good. if you go to the book value of companies like morgan stanley, 9% of book -- i mean, in other words, what i'm saying is, xlf, look out. 14 to 16 from june to now. but it could go back to a much higher level. >> you wonder about the nominations to treasury, good time to get out of the business. righting the ship, moving on to something else? >> elizabeth arden, now senator-elect on the banking
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committee, has always intimated if you wanted to know who did it right, not someone who was gouged, someone who is a respectable banker, the only name she would tell you is ken straw. it is entirely possible that -- i've been pushing for dave coty. but schenault is the banker. >> i think that's probably true. >> there's a lot of people being floated here. >> your name in there at all? >> i have not come up. not just because i have trigger finger, i'm just going to bring it out. people say, what is that about. i'm listed -- i'm questionable right now for sunday. i could be listed as probable. you know i play for the patriots. >> sure. >> i am a patriot. i play tor the patriots. >> we will not see him start a
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game again. >> but i did see him in a restaurant. that whole model thing, daniel craig kind of thing, not happening. >> 50 turnovers in two seasons, more than any other nfl player. >> a great tweet this morning said, holy cow, he's a machine. he's a turnover machine. >> meantime, fedex reporting fiscal quarter profits. impact of hurricane sandy at 11 cents a share for the quarter. revenues above forecast and largely short of estimates. its full year forecast comes in the current range of street estimates. the core express business, guys, their words, persistence weakness, down 33%. >> fedex ground fraet -- this is another one of these bad news/good news stories. if you read the headline, you say this is horrendous. but if you think the world's coming back, i mean, they talk about asia not being good.
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but wait a second, if asia comes back, look at the chinese market. if it comes back, maybe this is the play, and oil is stable. i find that many stories that look bad in a world that was declining suddenly are good. >> the other thing to keep in mind is they outline the sandy impact is 11 cents per quarter. if you back that out, it's still tops of the forecast they gave back in september. internally it was a beat, if you take out the impact of sandy. so that also can be construed as good news, or maybe not as bad as the headline number might appear at least. >> very much so. >> they still announced a lot of voluntary cuts. trying to cut costs by $1.7 billion a year, within three years. that was one of the caveats. people knew going in that -- >> you know what's interesting, look at the trading. we talked about this, david, the stock never broke the 83, 84. then they get a second announcement that was
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disappointing. it went from 84 to 86. here's a company that people -- institutions love to own. they're always looking for transport. the transports look like they're breaking out. and this is the one they love to gravitate to. because they know it's rough in the economy. they've always done right by the shareholders. every bad news has elevated the stock in the last three months. counterintuitive, but it is happening. >> you mentioned the baltic dry index, down 30% in the past two weeks. i think there are expectations things not looking so good in terms of shipping in general. >> so is max index, up rather dramatically in the last three weeks. we're getting a lot of cross conferences here. o it jumped to 14,000 last week, which is rather high. it was 100,000 before the crisis. i tried to rent one of these for a party before it got to 6,000.
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>> a party? >> why not. put it near the red hook, and you've got a couple of football field space for a couple nights. you know how much it is to rent a hall? rent a tanker. >> you have that many friends to fill a tanker? >> i have many acquaintances, very few friends. >> sounds like a rave party to me. >> something out of mad max. >> i like to keep everyone else in the tanker. >> let's check out shares of oracle. they're rising pre-market trade. the business provide said it earned 50 cents a share beating wall street estimates. revenues also above consensus for the current quarter. sees new software sales rising 3 po 13% for the current quarter. companies might pull back on business spending because of the fiscal cliff. oracle yesterday, jim, on the conference call, they pulled a
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honey badger. don't care about europe, don't care about the fiscal cliff, because they're not seeing it in the results. >> ooh, larvae. the cfo said, i love her, as you can see in our numbers, people want to continue to spend their budgets. they have a wonderful december so far, december to remember. and the $7.5 billion acquisition was proven to be the strategic -- most strategic and profitable thing oracle has ever done. talking about the -- just -- macy's, time warner cable, expedia, vodafone and walmart. >> now allison comes out and says it has turned the corner. we are turning the corner on
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hardware. crm and sap, they're at a 52-week high. it will be an interesting challenge to those guys today. >> i loved that allison mentioned sap. he won't even utter the term sailsforce.com. my hat is off to that team for what i regard as being the first really big think tank in terms of what's going on in tech. it's an umbrella for a lot of stocks. >> all right. up next, we'll talk with the treasury official at the center of the government's plan. selling the remaining stake in general motors. take one more look at futures. we've had two triple-digit rallies back-to-back. haven't done that since the end of july. and futures are up once again this morning. more "squawk on the street" in just a moment.
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live from capitol hill today. encouraging lawmakers to rise
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above gridlock.
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treasury announcing it's going to sell its stake in gm in the next 12 to 15 months. selling shares back at $27.50 a share. on the phone with us is tim massa, known as t.a.r.p., of course. great to have you. tim, what's the strategy overall here from a portfolio management side of things? you guys are winding down. are you willing to take a loss on gm because you took such a big gain on aig? >> well, thanks for having me, first of all. let's remember, we didn't make this investment to make a profit. we made it to save the american
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auto industry. which was on the verge of a collapse and would have resulted in 1 million jobs being lost. the investments were incredibly successful in that regard. but with respect to how we manage it, this is an unprecedented deal. we're getting a premium to the market price in a share repurchase. this is a higher price than we would have ever been able to get. the stock, you know, hasn't even traded above $27 during periods when we could sell. as recently as july, it was $18 and change. so we think this is a terrific deal for the taxpayer. and we still have 300 million shares that we'll sell out over the next 12 to 15 months. and we can benefit from any potential upside there. >> tim, jim cramer, how you been? >> good, jim. >> all right. tim, i know you wanted to try to get the ipo price. i'm trying to figure out, how do you measure your role in this, in that obviously you're a gm shareholder, so you don't want them to overpay for anything,
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but you also want the taxpayer to get overpaid, so to speak, from the current price. how did you resolve that? how did you get it to 27? >> we're at $27.50. it was a discussion with gm, and basically they came to us with a compelling proposal that they were willing to buy shares at a premium. and we negotiated over that. so we think it's a great deal all around. it's great for the taxpayer, and i think the stock price will react positively to this. it removes -- it eliminates the uncertainty as to how the government will exit. because now we've made it clear. and as i say, we can still benefit from potential upside from the future. >> tim, over the next 12 to 15 months, is there any hope on the part of treasury that you will even get close to the break-even price of $15 a share? >> we'll see what the market does and what the company does. but we recognize there are costs to this investment. but let's remember, the costs are far less than the costs had
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we not acted. and we have been successful overall with all the t.a.r.p. investments. all the t.a.r.p. investments considered as a whole will result in a gain to the taxpayer. the other thing is, we're winding all of them down. you know, we expect to basically have the program substantially wound down over the next 12 to 15 months. we've already made great progress in doing that. >> tim, with the liberalization of rules regarding management, we mentioned corporate jets and corporate comp earlier in the show. >> we agreed to waive a few covenants that were a carryover from the loan agreements and when he had a majority ownership of the company. this is the wind down philosophy here of removing any perception that, you know, the overhang is the problem. so that's why we agreed to that. >> and tim, finally, on gm itself, stock trading $27.60 this morning. you've got the good price for
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your shareholders, so to speak, with quotes. and of the shareholders who are benefiting. if you could get out at 29 or 30 soon, because there might be a lot of demand for this thing as we head into early next year, would you just get out entirely if the opportunity arises? >> we're going to do this in an orderly fashion. we expect to commence a dribbleout program, and we think that provides the certainty that the market needs. >> what's a dribbleout program? you'll just sell a little bit out at a time? >> we'll sell a little bit at a time, each day. >> jim, different from aig, you're going to be in there offering stock? >> well, this is similar to, you know, what we did with our citi shares. where we basically dribbled it out over a period of time. the company is still -- the company's made dramatic changes and improvements.
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and we think there's still potential upside here. they're rolling out new models, which i think hopefully will be warmly received. they're addressing their challenges in europe. so we think this is a good strategy. it's also consistent with our overall winddown plans for t.a.r.p. >> we're going to wiped down here as well. tim massad, always appreciate your thoughts. >> thank you for having me. >> tim massad runs t.a.r.p. >> find out how the "mad dash" turns out next. high heels, the holidays, and milk. what do they all have in common? we'll talk live with both the presidents and vice presidents of shoe maker manolo. [ male announcer ] you are a business pro.
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time for the "mad dash," as we watch the cast of the nutcracker come on the trading floor. they'll ring the bell in a few moments here. >> let's point out, here's what i think's important. jeffrey amel, ceo, very conservative. he talked about a series of what we think you could argue that they were too aggressive. talk about health care not being as good. appliances not being as good. energy pushed back possible, big acquisition. the stock has had a pretty good run. i regard it as being a true estimate trim on the idea that maybe things can't be that great out there. do you sell it?
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i would not sell it. >> other things that stay on that list, by the way, lowe's, key corp, u.s. bank corp, time warner. >> u.s. bank corp downgraded by morgan stanley. i think it's a really terrific bank. i had them on tv. i would not sell that either. >> let's talk general mills. >> ken pal really came out today and said this thing, it's right. we're starting to do it. re unites yogu he cites yogurt as being great. he pointed out the consumer is doing better, the numbers are good. this is not an expensive stock. it is a sleep at night stock. those of you at home that desire a stock you can actually put away, i don't like buy and hold, general mills has been a pretty good buy and hold stock, though. what ken does that i like so much is when it's bad, it's
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still smooth. okay? this is my kick the can down the road time. this is a general motors tie. all in one "mad dash." the return of the gems. day of the generals. >> very nice. we have the cast of the nutcracker about to ring the opening bell. and when we come back, we talk facebook. who is going to jump into the ipo waters in 2013. that subject coming up in just three minutes.
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that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. the opening bell for this wednesday. the cast of new york city ballet's production of the nutcracker at the nasdaq. habitat for humanity doing the honors there. certainly a lot to watch for. the euro is close to 133. 132.9 right now. that's signaling to the markets
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perhaps a risk on, after a two-month high in stocks yesterday, jim. >> a lot of companies had to caveat their quarters about what the strong dollar has done. we're not going to hear that next year at this time. we may hear that in the first quarter. a lot of companies, it took -- really took the wind out of the sails that you had in the currency problem. that goes away. the quarters are going to look much better. carl, you said 2013 could be different. and that is whae'reg to figure out. different in a lot of ways that seem positive. people confused at home, this is the fiscal cliff, is it the most important issue. how about a deal where you don't have too much belt tightening and you get the dollar going the right way, all this cash. >> a positive sign to that point, jim, is what we're seeing in the bond markets. we're finally seeing what looks to be a rotation out of bonds and into stocks. that is something we've been waiting for, a couple of days it's been going on, two days
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does not a trend make, but it's worth noting. influx into money market funds the most since december 2008. we want to see it out of money markets and into stocks. >> something that occurred at the exact time when the market really finally broke out. >> exactly. it would be something. it would be good for the investments, for sure. >> trying not to characterize people as being as selling low and buying high. but i mentioned last night on "mad money," that the -- unfortunately the citi, apple downgrade, you don't want to recommend it by 70, 80. >> jpmorgan defending a bit today, sticking by their target. the oracle effect, this is among the top ten on the s&p this morning. no coincidence. >> the cloud.
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the recitation of oracle, i think a lot of people get mad at ellison because he is such a chest thumper. >> he wins. >> and everyone loses except for him. he's not one of the guys that says everybody on the sales force wins. no, he's down there giving everybody the business. >> strong result out of oracle perhaps at the cost to them. red hat is also one to watch. gaining very sharply. out with earnings on thursday. so this could really be a good sign for rht, which is up by 1.5%. >> the ceo there has been telling us this story, from the airline business, believe it or not. there was some interesting commentary about europe in the or aoracle call. asia was up 13. europe was up 12. adding employees to europe,
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france, germany, very strong. similar to what bill mcdermott has been saying. we are all so doom and gloom about europe, ellison's talking about it's a bright spot. >> what about germany today, up again for december, as we mentioned at the top of the show, above $1.33 a day. something's going on there. the big upgrade on greece. that's kind of strange, right? >> up four or five notches. >> i have to stand up for a second. $8. >> is it finally time? >> i want to click my heels, but these are soft reeboks. you wouldn't hear it. >> are we going to see that, finally, at last? >> the way people were coming on and saying it's going to zero. >> running for the exit. >> when was the euro dissolved and greece kicked out? what was the date? >> it happened just in reverse. >> it was overnight. >> we'll see. i can't believe 2013 will not hold a couple of moments where we go, ah.
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but it is amazing. nothing we can do. >> we're afraid spain is going to come -- spain was supposed to come to market. italy, oh, my, what happens when italy -- it turns out you had to take it down. i know that john corzine, very controversial figure. that's a code word. but what a trade they almost had. in the news again today. >> almost. >> horseshoes, hand grenades. >> we should point out, gm was certainly not having the easiest of times of it. this morning's stock is up sharply, we're telling you why. the company will buy back at a premium to at least what was the market price as of yesterday, 200 million shares from the government at $27.50. that having the effect of sending the stock above that. why not, if you're gm, you've got all this cash sitting on your balance sheet. you're earning virtually nothing on it, why not take the
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opportunity, even at a premium, to buy it back by as much as 11%, shrinking the cap by that much. we heard from tim massad who runs t.a.r.p., they'll be dribbling out the shares over time. the next 12 to 15 months. similar to the strategy employed with citi. a bit of it coming out. and finally they cleaned it up with a few big blocks. >> that was very big news, frankly. because a lot of people were thinking, take the aig on the deal. there was a series of deals that were woke up. this is quite different. and what worries me here, and i do like gm, so to speak, but it was that overhead. it just traded -- everyone decided aig -- >> 19% now, the outstanding stock. >> the shareholder will be in there occasionally. >> do you think people will come in and take it down? >> i do. the whole return of capital story is one that has a lot of momentum right now. and one we have to continue to
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focus on. >> all the automakers are trading pretty sharply higher. toyota, 52-week high. honda motor up 5%. ford is up. if you had to choose, jim, because both ford and gm are trading at approximately the same gdp, what would you pick? >> ford is at 1516. the ceo said the job wasn't done. a lot of people were angry. because the stock had such a big decline. asia turning, europe turning eventually. i pick ford. >> there you have it. >> after this sale, in order to break even, treasury would have to sell its censure essentially for price at 70. to break even. >> the break even was 52 and change. >> difficult to do. >> we're up just a few points. what the heck is going on with
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this rally that we're having here, folks? it may not just be the fiscal cliff. there seems to be a new goldilocks scenario that's evolving here. stocks at multi-month highs. why are they selling gold? why are they selling bonds so aggressively? the euro's at an eight-month high. so here's the new goldilocks scenario. greater clarity on the taxes when the fiscal cliff gets resolved. europe showing determination to stay together. they've got a giant band-aid over all of europe. china is bottoming out. corporate balance sheets for america are in very good shape. now, the bears, every time i bring this up, yesterday i was talking about it, i get e-mail blasts, nasty icy e-mail blasts saying, bob, it's a fantasy. all of this goldilocks stuff is a fantasy. you cannot get strong growth with rising taxes and lower spending. that's not going to happen. you cannot have unlimited stimulus that is not going to cause inflation. that's just a fantasy. so there's a real fight going on. none the less, have you noticed,
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gold being sold, buying the euro, it seems a weird trade going on here affecting the markets. this was going on yesterday as well. this may have to do with the yen. the yen is hitting new lows against the dollar. it's hitting new lows against the euro. have you seen what's going on with the japanese elections? the new prime minister told the bank of japan we want more stimulus. guess who's meeting thursday? the bank of japan. japan's exports fall for the sixth straight month. you are going to see the bank of japan on thursday announce new stimulus measures. you're going to see efforts to weaken the yen. it's going to get even weaker. that is the old yen carry trade. that may be where some of this money is coming from to do the odd little trades that seem to be going on. out of bonds, into stocks, selling gold as well. i think that's a real factor here. what caught my eye this morning, there was a survey out saying the hedge funds is the most exposed to the market since
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2010. a lot of people mentioned that and said, that is a contrary indicator, high levels of activity in the stock market for hedge funds, often a negative indicator overall. let me mention night capital. they are selling themselves to geico. i took two-to-one ratio. this is a good deal all around. you're going to marry the biggest, fastest traders out there, getco. you're going to marry that with knight, which has the biggest wholesale business out there. so you're going to get big business, with the fastest traders around. that's good. that's a big market leader in that business overall. so i think they're going to be very happy with that. we've been asking nice people to come on the air and chat with us. we'll see what goes on with that. guys, big day here. still got the rally going on. going on for the last several days. >> tommy joyce gets to stay,
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executive chairman. always fine when i hear it's a fantasy. my partner would say, it's a fantasy? bank of america at $11.44. how about $11.43 for 1 million shares. that's a fantasy. there have been many other people who want to sell another million. maybe a fantasy, but the fires every everywhere. >> everybody knows yesterday was an interesting day for you long end traders, because we traded 3% in the longest maturity on the u.s. curve 30-year bond. you can see the interday chart, backed away a little bit. if you open the chart up, you can clearly see these are basically a couple of month highs. can it that be easier? 3% is the ceiling? you talk about a round number figure. pay attention to that level. psychologically, of course. let's look at foreign exchange. if you look at the euro versus
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the dollar, you're talking about an eight-month high. if you look at the pound versus the dollar, you're talking about, oh, about 14-month high. but if you're looking at the dollar/yen, the dollar is basically a 20-month high. this is in favor of the dollar. and bob did talk about after the election, abe in power, many are saying that the monotorists are having a holiday that could result after the completion of the two-day policy meeting at the bank of japan, as bob referenced. ing, that will be tomorrow. >> thanks so much, rick. let's check out the latest action in commodities where there is a huge amount of action. >> oil higher for the third straight day here on continuing hopes that we will get some sort of deal out of washington. also, with that euro stronger, that's certainly boding well, the dollar a bit weaker.
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we've got bullish numbers out of the american petroleum institute looking ahead to today's inventory numbers coming from the government. drawdown on crude, drawdowns all across the board. that is supported in the energy sector. but do watch today the january contract expires today. there's much more action in the february contracts. we have to watch the curve a little bit. we could see a little bit of volatility. we'll be back at 10:30 with those inventory numbers from the government. back to you guys. >> all right. thanks very much, bertha coombs. we want to talk about sirius satellite radio. the longtime ceo stepping aside. effective immediately. a bit earlier than had been anticipated. this is a company that is more or less controlled by liberty. and will soon be officially controlled by liberty. they are still waiting for the fcc's right of control to essentially go through. 49.8% of the company right now. you see liberty shares unchanged on the day.
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karmazin, no stranger to his illustrious career. affinity, to sirius, where he has presided over a company that avoided bankruptcy. that was a key transaction a number of years ago. there was literally a bankruptcy petition on one side and a deal with liberty on the other. they chose the liberty deal. it's almost been an infinite return for liberty. over the last year or so they spent a lot of money to go from 40% to 50% ownership of sirius. and one suspects once they take full control, we're still waiting for the fcc, the rights they need for that control, they may be looking at sort of to harness some of those profits both from the cash flow of sirius and the significant boyback of the company they put in place some time ago, buying back $2 billion worth of its stock. liberty will participate in that pro rata with every other shareholder. another way for them to return capital to both liberty and to
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other shareholders. they are still searching for a full-time ceo. the gentleman taking the shop for now, jim meyer, currently had been president and head of sales and operations for sirius. he may be one of the candidates. but we shall see who will run this investment. >> is this a, here's your hat, what's your hurry type of situation? fay did not have good comments about mel earlier. he's perceived as the man who resurrected this company. he's not been treated as i regard as fair. >> mel doesn't like to have a boss, so to speak, of any kind. that may be short sighted. he's 69 years old. >> he looks, what, he looks 55. >> he looks great. >> good tan. coming back from the islands all the time. >> he's got the gray hair and dark eyebrows and says he dies his hair. anyhow. funny line from years ago, but i messed up.
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we'll see. the question is, what liberty does with the asset. as i said, many people expect they will simply harness them to cash. they spent to take the 40% stake to a 50% stake. eventually there may be a transaction in the future for sirius down the line. we'll see. >> reverse split. >> with liberty, one never knows. $15 billion market value. we always forget how many shares that stands for. >> 2,000% since the beginning of, was it the low interest rate window? >> i think you're right. >> because it was trading at pennies. because it was a bankruptcy waiting to happen. >> that's right. >> liberty getting $3 million. >> i love the product. and i know a lot of people love the product and bought the stock. it's been one of those that's finally come back. >> okay. coming up next, facebook and twitter, how should the dispute be resolved. the face of retirement. what is david faber expected to
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look like when he turns 80. a question we all wonder about daily. >> he's still dying his eyebrows. >> take a look at this morning's early movers on wall street.
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instagram ceo is trying to reassure users it will not be selling their photos, after the privacy policies caused a firestorm. many twitter users using the hash tag boycott instagram. that brings us to this morning's question. what can settle the feud between twitter and facebook once and for all. tweet us at squawk street. we'll air your responses throughout the morning. the notion that it could possibly -- even if they're going to pay you $20 or whatever they compensate you to use your photos, ditz tushing. >> facebook is up this morning. hovering around 28. one thing in the statement, jim, is that they really did speak exclusively about this being a
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business. not a public good. >> i know. by the way, ken came down and said very good november. they've spoken. they're mon tizing better. facebook is a hard ballplayer. as i tweeted, this is not the end of the facebook twitter war. this reminds me of the apple-google war. people told me it was a good series. i didn't see it. >> what is the statute of limitations? >> the "times" apparently thought it was yesterday. >> i totally agree with her for what it's worth. >> carl doesn't. he was down on it. >> i was having a separation from "homeland" after that finale. the wall street debut in the new year. the ipo picture for 2013 coming up. but first --
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>> coming up, are you cautiously maneuvering through this market? or have you been hitting the walls? cramer will help direct you with six stocks in 60 seconds. proceed with caution. when "squawk on the street" returns. [ male announcer ] how do you trade?
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we're going to do six stocks in 60 seconds with jim. >> what a stock. i've got to tell you something, this is a house wear play. it starts with a buy. they bought back a ton of stock. >> citi positive on starbucks. >> you're talking about single server coming back. the bottom in this stock was the analyst theme where they said this is going well. >> web bush up, pannera. >> now you want to pick it? it's a little bit late. this sa good stock, though. 400 calories for that asian salad is terrific. >> what's the news on dmnd? >> a guy from alex partners is really running the company right now. guide down. but it looks like it's finally clean. >> miller dayback on dunkin.
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>> dunkin has been stalled here. a lot of people felt perhaps the business had stalled. coffee bull market continues. >> finally, you mentioned this earlier, johnson control. >> if you break this company up into a lot of different companies, it would go like that. i'll come up with a "mad money." >> speaking of going like that, tonight, whole foods? >> one of the greatest ceos, walter robb. i can't wait to see him on the show. this has been a remarkable performer. we talk about sirius satellite. people go to whole foods, buy the stock. hasn't been wrong. >> a minute to chat about apple. last night you took the citi analyst team to task. you said they were traders, not analysts. you said this call was lamentable. >> i was trying to be a diplomat, being in my gandhi personality. truth and reconciliation about this call. they actually said it was a trading call.
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they felt there was great momentum coming out of the november 25th, the big decline. i don't want my analysts to make a trading call. i want them to make fundamental calls. people bought this stock at $5.70 to $5.80, because citi said it was a trade. they get to $5.09 and they get shaken out and give up on the trade. carl, we don't need analysts to make trading calls. we need them to make fundamental calls, because this scared a lot of people out of the stock which may be a washed-out bottom. >> see you tonight at 6:00 and 1 11:00 eastern time. counting down to the end of the government motors era, as they sell their stake in gm. should you be buying? a little bit later on, philanthropist abigail disney, one of the patriotic millionaires willing to pay more in taxes at 1"squawk on the
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welcome back to "squawk on the street." let's get a road map for the
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next hour. good-bye government motors. the u.s. treasury announcing it plans to sell its remaining stake in gm, as early as next month. we'll sort through what that means for taxpayers, shareholders and the auto industry. >> two back-to-back triple-digit rallies for the markets. how much higher can we go in the face of the fiscal cliff? >> "time" magazine is out with the person of the year. we'll take you through the list of who made the grade. >> last but not least, only 12 days left until the new year. where is the smart money looking to invest in 2013? >> first, back to the big news out of the auto industry this morning. the treasury exiting its stake in gm over the next 12 to 15 months starting with the automaker purchasing 200 million shares by the end of this month. phil lebeau has more. >> carl, you can almost hear the sighs of relief coming from the gm headquarters in detroit. they have been calling for this
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for some time. here's what's going to be happening. you mentioned that the government is going to be exiting general motors, not happening all immediately. it's going to take some time, 12 to 15 months. they're going to do a dribbleout is what they're saying. gm is purchasing 200 million shares from treasury at $27.50 a share, about $5.5 billion. and treasury will sell the remaining 300 million shares through various means. that disposition, as we mentioned, earlier we heard from the head of the t.a.r.p. program, they're going to be starting to eliminate the gm shares in january of next year. so starting next month. remember, treasury originally invested $49.5 billion in general motors back in 2008 and 2009. and if we take a look at shares of gm going back to the ipo, remember, the ipo price was $33 a share. for the government to have fully made back all of its money, it would need to sell the remaining shares at $54. that was a $500 million.
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with the move of 200 million shares being bought by gm, the government would need to have gm shares rise to $70 a share in order to make back that $49.5 billion. it is clear, carl, and melissa, that they are not going to make back all of their money. exactly how much the loss winds up being remains to be seen. we don't know what the remaining 300 million shares, what's it going to sell at. $30, $33? they'll dribble it out over time. we really don't know at this point how much the loss the government's going to be taking. >> all right. thanks very much, phil lebeau reporting on that very important story. gm shares up now sharply. something we haven't discussed in the first hour of "squawk on the street" this morning, the fiscal cliff. yes, it is still looming, if you're out there wondering. the white house rejecting speaker boehner's plan to avert that cliff. is a compromise still in the cards? let's bring in bob cusack. this week began with some optimism. the two sides seemed to be getting closer to a compromise.
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yesterday around this time we got plan b. has that taken us further away, in your opinion, from a potential deal? >> i think it has. speaker boehner is now trying to round up the votes to pass that bill. that's obviously not working with the white house to get a bipartisan bill. even though the talks are ongoing. but the chances of a deal took a hit yesterday. the political rhetoric intensified. we're six days away from christmas, and we don't have ooh deal. i don't think we're that close. >> why did boehner go to plan b at all? i mean, in terms of strategy, hard to imagine the tea party comes along with him. you've got a lot of democrats as you might expect who are not going to. it's not as though that necessarily is a viable alternative to getting passed before the end of the year, is it? >> it's a very risky move by the speaker. he wants to increase whatever leverage he has. he doesn't have much in the wake of the elections. he's trying to pass a bill to show that he can keep his troops together. nancy pelosi is whipping on the other side. even though she has supported the $1 million threshold before,
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she is whipping against it. so republicans are going to have to carry this bill basically by themselves. and in this congress, they haven't been able to do that a lot. >> senator schumer was quoted as saying something this morning to the effect that the sides are so close, it would be hard to believe this thing actually fell apart at this point. >> i still think we're going to get a deal. the chances of it before christmas, i think, are growing remote by the hour. but as we get closer to december 31st, i think the parties will come together. but between now and then, i think they need that deadline, december 31st. that deadline is not necessarily december 25th, even though members like to go home. i think there's going to be talks going into next week. >> all right. full deal, a bit of a deal that then gets revisited in the new year? >> yeah. not a big deal. a deal that may deal with the defense cuts. obviously the tax rates. i think there will be some type
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of change to entitlements, not major changes, that tax reform and entitlement reform, that's going to happen in 2013. but is that going to be enough for the credit rating agencies? that's the big question. >> yeah, and in terms of hearing from either the speaker or the president on this before the end of the week, any expectations there? any meetings that you're aware of that are planned or phone conversations? >> the one good sign here is that both the white house and boehner's office have not been leaking a lot of deals of those conversations. so there's goodwill. i think they'll be continuing to meet. but now they're in a bit of a pause to see if boehner can pass this plan b, which could be on the floor as early as tomorrow. >> some of the scorched earth op eds today. the journal and times both saying, you know what, to heck with the other side. the white house should wash its hands of it, boehner should wash his hands of the process. is that weighing on them or not? >> certainly the "wall street journal" plays a bill role in
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the gop leadership moves. but speaker boehner wants a deal. he talks about this like he did the nation's credit default rating. he did not want to go into default. they finally got a deal on that in august of 2011. so he does not want to go over the cliff. but at the same time, he's got to have enough votes so he saves political face when there is a deal. he needs to get a majority of the majority to back whatever he strikes with president obama. >> and without putting his own speakership at risk, right? he's not willing to sacrifice that? >> yeah, i think speaker boehner is in a pretty strong political spot. there's no one who could challenge him and defeat him. there could be somebody to run against him and get votes. but speaker boehner is in a pretty strong position. but he needs to maintain that position. >> all right. bob, we'll be paying close attention, as always. bob cusack joining us, managing editor of the hill. >> thanks so much. >> high heels, the holidays and a carton of high-grade milk.
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what's the common thread? >> i have no idea. >> tough tease. the president and the vice president of manolo will give us the scoop on that. >> 7 1/2 is all i have to say. is the fiscal cliff optimism the only thing behind this rally? we're talking all things markets. that's next. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country,
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we talked to the treasury assistant secretary to financial stability earlier.
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here's what he had to say about the government's investment in gm. >> we didn't make this investment to make a profit. we made it to save the american auto industry. which was on the verge of a collapse and would have resulted in 1 million jobs being lost. and the investments were incredibly successful in that regard. but with respect to how we manage it, this is an unprecedented deal. >> so does the government's exit make gm a buy? let's bring in eti mchaley. good morning to you. >> good morning, melissa. >> does this change your view at all of gm? >> we've liked gm for a long time. this is a welcome surprise. the timing is a bit surprising. we've been big fans of the story. and this is welcome news. a vote of confidence here for management around 2013, we think. >> with a buyback of 2 million shares of reduction of shares outstanding by 11%, i assume you're going to be adjusting
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your estimates accordingly? >> we did a little while by a comparable amount by 11%. we think that the share buyback also implies that the fourth quarter cash flow rate was likely coming in above expectations. this really supports the view that even in a global environment where a major region, in this case europe, is in a recession, this auto industry can deploy cash aggressively. >> you mentioned the cash bills. even with this action, the buyback, about $30 billion still on the balance sheet. got a lot of credit lines. what do you think gm will do with this money? >> you know, i think for the near term, post the buyback, they'll probably invest in the business. but they still have some capacity in the 12-plus months to put in more cash. i think that will be determined by the overall economy and how the new trucks perform. this is a real big announcement. investors have been concerned that gm has been hoarding cash
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up until now and that's prevented low valuation from being appreciated. this is a real vote of confidence in the balance sheet and in the cash flow to the ratio of the company. >> this was a surprise. but the government still has to exit its remaining stake which is more than 300 million shares at this point. treasury has told us that it intends to do that by dribbling the stock out. still 300 million shares is a sizeable chunk. do you still think that will be an overhang on the stock? >> to some extent, yes, perhaps the next 12 to 15 months. but i think the big question for investors is, will gm step up to buy the stock. the answer for now is yes. but the bigger story as we progress through 2013 will be the pickup truck launch that gm unveiled last week. i think that will likely be a bigger determinatiodeterminatio >> what's your top pick in the
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space? >> we talked about gm this morning. we liked the space. of course, gm is -- we've been big fans of the overall investment case for autos. gm is certainly up there. >> let me ask you the question in this way then. if i had $1 to invest in one auto stock, would that be gm? >> a range of stocks. we're bullish on the pickup trucks. so there's a couple of suppliers that play into it. and of course, gm would be one of them, yes. >> itay, thanks for your time. appreciate it. >> thank you. >> new developments on the fiscal cliff this morning. the white house says it will veto speaker boehner's plan b. john has more details. >> carl, you had a statement from white house communications director dan pfeiffer a few minutes ago, which was notable in that he didn't say that advisers would recommend to the president that he'd veto the plan b. he said he would veto the plan b. this is another attempt by the administration to respond to
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john boehner's ploy yesterday, to try to put pressure on john boehner to come back and rejoin the negotiations. plan b is not likely to become law. and i've got to tell you, carl, the more people i talk to on both sides, the more pessimistic they're getting. i still think the fundamentals exist for a deal. and sometimes the public posturing is stimf simply covered for private narrowing of differences. we've had a significant narrowing of differences. but at this moment we're still in the phase where both sides are pushing each other, testing each other and we'll see whether we can get an agreement in the next few deals to get a deal before the end of the year. >> is that pessimism based on staffers? or just your instinct, just your gut? >> it's instinct and it's also the fact that we have in fact seen the two sides move close together. remember, john boehner's complaint about the administration's offer of the other day was that it had more revenue than it had spending
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cuts. the administration says, well, no, actually, it has more spending cuts if you count interest savings than it does revenue. if they're haggling over the relative balance, and talking about a deal well over $2 trillion, a couple of hundred billion, yes, that's a lot of money, but it sounds to me like money that could be bridged by tweaking the deal one way or the other. so i am not -- i'm not convinced yet we're not going to have a deal, but as i mentioned, the mood reading that i'm getting from insiders is, it's getting worse and worse. >> great stuff, john. thanks so much. john harwood in washington. chief market strategist with russell investments joining us here at post 9, and the chief national investment strategist with wells fargo advisers. good morning to both of you. >> good morning. >> how does this weigh on your
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thesis for the near term? >> the question is in the details. our base case for the russell forecast is we do not have a recession in 2013. the majority of these larger issues are dealt with. but there's going to be a fiscal drag either way. the way we see this at housing contributing in a positive to the economy, offset a lot of the fiscal destabilizers. but i think there's a lot of overlap right now. they're squabbling over details. i think we need to keep in perspective, this is the first time in america we've m a serious substantive conversation about balancing the budget. it's not a bad first start. >> next year you're looking for 1,500 by year end? >> that's our target sale. single digits for the equity market seems reasonable. no great shakes. >> paul, you're a little more optimistic, but not that much more. which sort of, i don't know, flies in the face of a lot of things we're reading, such as in the journal today, this supposed
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boom in m & a if a deal were put together. >> right. i mean, it's really the uncertainty that's been weighing on the economy these last couple of years that's made the most difference. if you look at the cycle and how it affects markets, the cycle has been very much like other cycles in terms of sectors that you should prefer, large caps versus small. it's just the uncertainty suppresses the amplitude of that cycle, makes things less attractive, and going forward, we think that uncertainty will diminish, and that we'll have a better opportunity. >> steven, traps for people who want to enter. is housing too rigid at this point? >> i don't think so. if you look at within the indices, you're seeing housing sensitive. doing very well at least the last couple of months and weeks. i think if you look underneath the indices as well, defensive and dynamic, it's been gaining traction. i think that is a guardedly
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optimistic sign in 2013. i think valuations are always going to be important. multi-asset, globally diversified. there's a strong fundamental for 2013. >> paul, are there better bets outside of the united states at this point? taking a look at where the national indices are performing. germany the highest level since january 2008, hong kong the highest level since august of 2011. are we missing out on an opportunity by not looking abroad more? >> not at this point. we expect the emerging markets to outperform the u.s. markets in the coming years. but a lot of the optimism about europe and other places has largely been baked in. we'll be seeing pullbacks, i think, as some of the reality of the still being in a recession in europe and the reality of a slow chinese rebound begins to sink in the beginning part of the year. we would tell the investors to stay put right now, stay
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neutral. >> i was looking at the 38% indicated that now overweight europe. excuse me, overweight emerging markets. that's double what it was just in september. >> longer term investors, emerging markets we think for next year. i would take the other side of that perspective. globally diversified, commodity space, emerging markets could by the end of next year begin to gain traction. shorter term we think the united states is more attractive. but for a longer term investor, you need to look at the global pockets of return and capture them. that speaks to good research, security selection and global diversification. >> you look at the dax, right? outperforming not just the sort of what's reality seems to be all about. wouldn't there be a classic short going into the new year? >> you know, that would have been a great play the last couple of years. but i'm not sure how quickly that reversal is going to come. investors might find themselves
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taking losses for some time before we start to really see that pullback. while the pullback is so dependent on political events in europe, we wouldn't be inclined to short here. we would simply stay neutral, wait for the pullback and buy. it's a simpler strategy. >> steven, paul, good to see both of you. thank you. >> well, see this lovely gentleman sitting right next to me? interested to know what he may look like 40 -- not you. >> oh, i thought you said beautiful. >> next to me. interested in seeing how he will look 40 years down the road. how about your own investments a few decades from now? one well-known bank is giving you a snapshot of both. we've got the details right after this. [ engine revs ] ♪ ♪
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are you saving enough for retirement? maybe not? but one bank is resorting to extreme measures to get you to actually do something about it. kayla? >> melissa, financial advisers don't really want to wait for investors to get older before they get wiser. with mckinzie saying two-thirds of early boomers will come up short for retirement.
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now bank of america is pushing a new product on young people to start saving sooner rather than later. >> oh, my god. >> it's not a happy picture. what will you look like at 107? will that image really get you to start saving? >> we're taking you into the future. >> that's what bank of america is betting on. they spent years developing face retirement, an application to envision retirement and its costs, wrinkles and all. it's not pretty. but the goal is to motivate you to build a bigger nest egg. >> we had conversations with our clients. and it was all about, we couldn't get them to think about ahead for the future. we thought of this, an aging process where we could show a picture of them in the future and tie it back a little bit. >> behind the shock value, there is some science. last year researchers at stanford found young people who met their future self were more
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likely to save. by the calculation an average 30-year-old today needs $1 million to retire by age 65. nearly half of all the 18 to 29 have nothing saved. so it's no surprise that market is being flooded by companies trying to cash in on a sweet spot of potential retirees. with 50,000 to 250,000 in assets, making up some 25 million households. some experts wonder whether the land grab is a good thing. >> i think here we need to be careful. i'm not necessarily certain that there's an optimistic message, a hopeful message, an inspiring message. >> however harsh that message may be, it certainly gets you thinking. >> i'm going to save up for plastic surgery. >> it's too early to tell whether the reception means investing dollars since the product just launched this month. 10% of the people who logged on have shared that image on
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facebook. i guess they're not embarrassed. i guess they didn't look at bad as i did. i think maybe if you look as good as david faber you would probably want to share this on social media, guys. >> david faber, yeah. >> what do you look like? >> i think we have the big reveal. there it is. you look a little bit like william shatner. 67, not too bad. your chin drops a little bit. david with the gray hair, i think he aged pretty well. >> you're looking pretty good, david. >> 107. gravity is definitely taking its toll there. that's not accounting for the work i'm going to have done, is it, kayla? >> no, it's not. that's the funny thing we saw from the people we interviewed in bryant park last week. most of them said i'm actually going to be saving additionally for plastic surgery, some way to fix that motion of gravity. >> all right. yes. i'll keep that in mind. that wasn't that depressing. it will motivate me to get things done. >> do face yoga. >> 107 is coming.
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oh, man. i'm going long allergen right now. >> brian? >> yeah, i don't think i'll live to see 107, a short life, but merry. home builders, look at lennar, the home starts came out weaker than expected. single family starts for the majority of that falling about 4%. but the key is, they're still well up year over year. lennar up 97% year-to-date. this stock's nearly doubled. it's done well. the reason we're bringing this up is watch housing starts. we had a boom back in housing. maybe it's a one-month slide. but important to watch to see if this maybe is the turn. maybe home builders are done expanding a bit after years of depression. wait until next month, i guess, to find out. lennar down about 2.7%. most of the home builders are also down today. >> all right.
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thank you very much, brian sullivan. breaking news on crude oil inventories after a gain of 2.5% in the last five days. will the data push us even higher? >> also ahead, manolos for christmas? we're going to sit down live with the president and vice president of the famed shoemaker to talk about luxury spending for the holidays. [ male announ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. it's no wonder so many investors are saying... try running four.ning a restaurant is hard, fortunately we've got ink.
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welcome back to "squawk on the street." i'm bertha coombs. the government releasing the
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weekly inventory numbers. a little bit bearish. we had a drawdown of about 1 million barrels of crude. that was less than the estimate for 2.3 million drawdown. the distillant drawdown was down 1 million barrels. we had a build in gasoline of 2.2 million barrels. this contrasts to the more bullish numbers we saw overnight. not a huge amount of change. do bear in mind that the january futures contract for crude is going off the books. there's more action in the february futures contract. but overall, carl, things are little changed. one good bit of news as we head towards the holiday next week, every state in the union now has gas below $4 a gallon on average. it's been a long time since we've seen that. back to you. >> that is something else. thank you so much, bertha. bertha coombs covering the complex for us. "time" magazine unveiling person of the year, and the winner is -- the newly reelected barack
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obama. we'll check in on some of the contenders for the title, how they reach their decision over at the book. the international editor for "time" magazine joins us from new york. good morning to you. >> good morning. >> you're the international editor because they just named morsi as a contender. why the president? >> well, we elected the president because we thought ultimately this election was even more consequential than 2008. the 2008 election was really about hope and change and the historical place of barack obama. this is actually a verification, and an ensconcement. he won this election very conclusively. demographics not only in his favor, but he successfully exploited them. he got people to vote who usually do not vote, and he's now down it two elections in a row. >> it gets so much attention, even in the face of what we know magazines have been through. and of course, a lot of
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criticism. the main thing we're hearing back today, especially in social media, is that it's too obvious. how do you get away from that? in any year where the president is obviously a looming figure? >> the president of the united states is a candidate really in any year. and actually, the president is not a shoo-in in any year. in fact, obama is only the second president to be person of the year for both his election and his reelection. we evaluated obama and we think he stands on the merits because we think he represents not only this end of the republican revolution and a new dawning of a new power in politics, being minorities, college educated women and the young, but also because where people have missed in the narrative over the past four years is obama is a very strong and powerful candidate. and the american people believe in him and trust in him when it comes down to the bottom line. >> jim, i'm curious, is the person of the year edition a top seller out of all the editions
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all year? i'm wondering how important it is in terms of picking the right person to put on that cover in order to spur sales. >> obviously we create a magazine in order so people buy it. and read it. so it's always a consideration. and it's always a top seller. but mark zuckerberg was a huge seller two years ago. the protester, person of the year last year, was much talked about, and we thought a very worthy choice. but it was not the top seller. a couple of years ago, we had ben bernanke. again, we thought it was a valid choice. we thought it was important on its news merits. but ben bernanke was not the hugest seller in the world. so we think obama will do well. but it's not our only consideration. >> some of the other names, tim cook obviously gets mentioned a lot. the physicist. are you allowed to dissent like the way jeff lacker dissents? who would have been your pick? >> well, i was part of the
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group. and, you know, there was dissent within the group. you referred to earlier, yeah, it is one of the best things and the most fun things that we do within the group. but ultimately, it is rick stengel, the managing editor, it is ultimately his pick and what happens in the small council room stays in the small council room. >> jim, thanks so much. great seeing. >> nice to be here. >> jim frederick from "time." >> a battle brewing between facebook's instagram and twitter, and it involves your photos. we've got the details later on. right after the break, steven schoenfeld is here to tell us where your message money is being put to work in 2013. customer erin swenson bought from us online today.
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portfolio management teams
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through his $2 billion proprietary investment firm. he's looking to expand. he's recruiting talent from galiant capital. when they think about it, they think, a lot of short-term traders coming in every day. using largely your capital. you trading as well. then everybody goes home. that's not your business any longer. >> no, it was a major part of our business for years. but it's about 10% of our business now. most of our business has been focusing on the hedge fund world. and we've been in the hedge fund since 1995 as a major investor. more recently, in the last five years, six years, we've been principally going into quaunt. >> why relative value? >> stock pickers is always going to be reasons for stock pickers, for a few years they underperformed. mostly because of high correlation of stocks to each other. led mostly by the euro, as the
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euro went, so did stocks. stocks went parallel to each other. that's going to ease over time. >> you think that's going to start to change? >> absolutely. >> we've had hedge funds underperforming for three years in a row. >> with every bubble and burst comes opportunity. i feel those are two good strategies. it's a more consistent model for diversified groups, covering different parts of the marketplace. >> that's where you're putting a lot of your money to work as far as hiring a couple of guys to manage whatever funds you want to allocate? >> we should say that as well. >> you're hiring people. >> we're looking for the best talent and the big thing is, versus hedge funds, as prop, we have flexibility. we have a lot of -- we care a lot about their wish list, want list, need lists of the managers, and to find the best talent, you need to offer them
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something. >> so we offer a prop world. an example would be paying up for consistency. so we're looking for the best consistent relative value performers. we have some special internal metrics to give them higher payouts than they can get at other hedge funds or banks. >> steve, how does your model differ from that of, let's say, stevie cohen? i know s.e.c. takes in outside capital, but most of it is mr. cohen's, a lot of it allocated to different guys. he brings guys in, gives them a certain amount of money and says go to it. give me some of your ideas and let's talk as well. how are you different from that? >> it's similar in the way we both back strategists. but his is more -- he's at the hub, great trader. steve is one of the best traders of all-time on wall street. and he's always sharing ideas, best ideas with all his portfolio managers, and a lot of it gets filtered through him. he's very, very involved in the
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books. my managers are more passive investments, where i'm not dealing with them day to day, month to month, quarter by quarter and sharing ideas. they do their own thing, i do my own thing. >> it is all your money, isn't it? >> correct. >> that's a nice problem to have. and so the s.e.c. in terms of at least, you know, most hedge funds have to register with the s.e.c. you don't have to register with the s.e.c. >> we don't have to register, but we're still regulated by the s.e.c. like everybody else. >> what about the hedge fund business overall? is it any harder to start a hedge fund? we may see talented guys come from a number of these firms that are having some issues at this point. are they going to have an easier or harder time raising money? >> seeding is pretty much at a low where not a lot of entities are out there seeding. seeders typically try to own 20% to 30% of the gp. we're just looking for capacity and trying to invest in the manager and talent. as far as overall hedge funds,
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the big guys like the big names have underperformed for a while, they're great. they have great track records. but a lot of them have too much money to manage and they're overcapacity where they might have a guy who hit a sweet spot at $300 million. that would be a great consistent track record at $300 million. and because they have so much money and they need return, they have to push $800 million, $1 billion to them and might go into strategies of products that aren't his core competency. >> you made your money obviously in trading. why not do something else? in other words, again, this is your money, you're making a decision this is the best way to allocate it, the best way to get a return on it. there are a lot of other things you could be doing. >> that's true. i just have a passion for the business. but i really do have a passion for short-term trading. but i really have a passion for the quaunt world and relative value world. and they are just more consistent, because they're not taking a lot of market exposures
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and more neutral based strategies. >> and maybe not get the returns. >> i'm happy because it's more of a consistent diversified model. >> steven schonfeld, appreciate you coming down to join us. >> thank you. >> you're very welcome. >> let's get over to the cme this morning. rick santelli in chicago with the santelli exchange. >> good morning, carl. we always like to be realtime with the exchange. and of course, the big news today, gm. i have a special affinity for cars. i'm a collector, restorer, hobbyist, i've been working on cars since i was 13 years old, and i have several gm cars i've worked on and have had for over 30 years, like my '64 pontiac. so i love cars. but what i don't love is some of the numbers switching that goes on. now, forgetting the argument, should we bail them out, shouldn't we have bailed them out, could they have gotten debtor in possession financing, did the government poison the well, could they have a deal like goldman? put together multi-million deal
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with buffett? let's not go there. let's consider this, right now everybody's handicapping on the stocks p. the government owns 500 million shares. they'll get rid of a couple hundred million shares. they'll change the dimension of the stock by about 11% in total. for that $27 and change, we're going to probably take close to a 50% loss, because according to phil lebeau, and he's my four on the floor lebeau, 54 would be the break-even. when you extract the $27 and change price, the rest of those shares are roughly, according to phil, you would have to recoup $70 to break even. but i'm talking about something else nobody else is talking about. was it worth it, what are the numbers, we have to go to an article in the "wall street journal" in november of 2011. and if we put that on the screen, i'll read it. general motors company will drive away from its u.s. government finance restructure where the final gift in its trunk, a tax break that could be
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worth as much as $45 billion. now, there are some other numbers that are lower. this is the long-term implications of a tax loss that they're aloud to carry forward, from what i understand some of my sources in bankruptcy, that this isn't something normal in a normal bankruptcy. this was kind of unique to that very special bankruptcy. let's go over some other issues. according to a gm spokesman, because i was working on a project this year in may, so this is all based on may, but some of it doesn't change. in may, the spokesman told me, remember, bankruptcy, in 2009 before all this stuff really hit, that they had a total of about 77,000 u.s. employees, this is in cottage industries. u.s. employees. at that time, globally, over -- outside the u.s. they had about 205,000. when i was working on my project in may of 2012, we want to get it straight, the same spokesman said they currently had 77,000 employees. does that look about the same to
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you? how many times we're at millions and millions and they had around 215,000 global employees. so we want to just put the record straight here. i personally think the cottage industries is overplayed a bit. if i'm in the business and you do 14 million annualized units of sales, so many cars are going to be sold. and manufacturers will just sell to another one. but that's an argument for another day. carl, back to you. >> all right. thank you, rick santelli. after the break, manolos and milk. i love the holidays. and with my bankamericard cash rewards credit card, i love 'em even more. i earn 1% cash back everywhere, every time. 2% on groceries. 3% on gas. automatically. no hoops to jump through. that's 1% back on... [ toy robot sounds ] 2% on pumpkin pie. and apple. 3% back on 4 trips to the airport. it's as easy as... -[ man ] 1... -[ woman ] 2...
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what do world famous shoe brand and a milk farm in connecticut have in common? as it turns out, the co-owners of both businesses are also part of the dairy world. both of their businesses have a reputation for careful production and limited distribution. george malcolm is president of minolo. they're co-owners of the dairy farm. guys, this is a fascinating story. right now the trends aren't
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necessarily in milk's favor. consumption is down right now. there's a lot of competition with a lot of the soy milk products and almond milk products. what have you noticed in this business? >> well, we have a very what we call local sort of business. our local community really supports us. we just started to bottle our milk about a year ago. we are just fascinated that people really want this local, fresh product. so they will support. they will support the local farmer. that community gets behind us. in just one year, it's just amazing. >> the unique thing about our farm is most farms -- and the demise of most dairies is, you know, their cooperatives. the milk you buy, maybe 30, 40
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cooperatives of dairies that the milk is picked up from 30 or 40 farms, blended together, and made into one milk product. our milk is picked up from our farm, only from our cows. five minutes from our farm is our bottling plant where it's bottled and shipped to the stores. it's truly a local product. you know, it's really milk like it used to taste. it's the taste of the milk, the freshness of the milk, the care we give our cattle. we feel that the community has embraced that. >> you have 350 cows on your farm, correct? so when people go up and buy your milk, do they have any idea you're also the guys behind the shoes? >> they do, but they really don't think that we're really very active in the farm business. we're there. >> are you milking the cows? >> i do put my boots on, but i don't get up early to milk the cows. but we're very, very involved with both the farm, all those
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animals that are cared for, the health of the cows, and nutrition. we're very involved. we're involved in the dairy world. it's just amazing. when we started the business, we were just into genetics. we nailed that. we have some of the world's best genetics. people buy our embryos from all over the world. we're really proud of that. >> if i can break in and tell you a funny story about that. we owned the shoe company for 30 years. he's our partner for 30 years. we've owned the farm for ten years. so the guys at work on the farm, they knew we owned manol manolo blanik. when their girlfriends started watching "sex in the city" and the shoes became popular, then it became a big deal. then it became, wow, we had no idea. so it was very funny. until "sex in the city," they knew manolo blanik, but they
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didn't know. so thank you very much. >> just to add to that, even the gas station attendants will say, oh, my god, manolo blanik. >> speaking of which, can we talk shoes for a moment? >> i never thought those words would come out of your mouth, carl. >> i have bought these shoes before. >> keep buying them, please. >> i probably will. how is it holding up? we keep hearing about consumers deleveraging. but then we're hearing they're no longer deleveraging as much. are people more willing to splurge? >> i think there are two things to both businesses. that is the consumer demands quality. of course, they look for the price to be there when the quality is there. what we have done in both of our businesses, because we own the factories in italy, so what we've done with the factories in italy, when the economy turned sour in 2007, 2008, we went to the factories and said, listen,
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we're not taking our production to spain or brazil or china as most people did. we wanted the shoes to stay in italy. but we said we'll give you 10,000 pairs of one pump in a color, you know, black suede, if you can give us a better price. by doing that, the consumer stayed happy. niemann marcus stayed happy because we were able to respect the price they were asking at the time. our business has actually grown stronger during that depressed time. >> last question, what is the one pair of shoes that i should be owning right now? >> right now, our hottest shoe is a pump called bb. it's a very sexy pump. you're too young to remember, but there was a company that you may remember called charles arvant. they were known for one pump. a pump does something for a woman's leg that nothing else does because it elongates a woman's leg. so this pump elongates a woman's
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leg. buy one. >> i asked the question for you. >> just to add to that, it's so hard to do a really classic shoe and do it beautifully. this is -- the bb is a classic shoe. >> you're in sales mode now. >> i'm going to check that pump out. trust me. >> it's hard to do that simple, black dress. it's hard to do the simple shoe. >> we got to go. sorry. great to have you. still ahead, cftc commissioner bart chilton joins us live. hi. i'm henry winkler.
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ship fedex express by december 22nd for christmas delivery. markets stubbornly in the negative. about 14 points. a lot to talk about tonight. >> yeah, piper jaffray's top picks. plus, a recent survey found that a lot of people are cutting the cord on cable. we're going to pick apart that trade. >> all right. david, i'll see you at manolo later on. >> look forward to it. >> thanks, guys. if you're just joining us, here's what you missed earlier this morning. welcome to hour three of "squawk on the street." here's what's happening so far. >> ultimately, the markets will turn on us. i think if anything that bothers
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me, it's the reality that $1 trillion deficits and zero interest rates are not a prescription, and we have to deal with it. >> your phrase "rise above" is really what we need here because the country, you know, business leaders, the economy desperately needs certainty and a comprehensive solution, not a plan b. >> if asia comes back, look at the chinese market. if it comes back, maybe this is the play. oil is stable. i find that many stories that look bad in a world that was declining suddenly are good. >> we think this is a terrific deal for the taxpayer, and we still have 300 million shares that we'll sell out, you know, over the next 12 to 15 months, and we can benefit from any potential upside there. >> he does not want to go over the cliff. at the same time, he's got to have enough votes so he saves political face when there is a deal. he needs to get a majority of
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the majority to back whatever he strikes with president obama. >> the "squawk on the street" countdown to christmas is in its final week. are you ready? ho, ho, ho! ♪ good wednesday morning. we're live at post nine of the new york stock exchange. about 90 minutes into the session. let's get a check on the markets. s&p down three. nasdaq basically flat. of course, coming after two triple-digit rallies for the dow. something we've not done since the end of july. oracle is a big gainer today after posting better than expected numbers last night. sales will stay strong despite fears of the fiscal cliff. and home builders some of today's biggest losers. dr horton, kb home, and toll brothers all in the red on that news. our rogue map this morning goes
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like this. new developments on the fiscal cliff. the president says he would veto speaker boehner's plan b, which proposes raising taxes on those making more than $1 million a year. we'll talk to a patriotic millionaire who happens to be the grand niece of walt disney about what high-wealth individuals want in the deal. plus, a sub-prime financial product is going bust in china. we'll find out if it's the final red flag before the much talked about banking crisis there. then, facebook arguably the most high profile ipo of the year. what about next year? what companies are set to go public in 2013 and what ones could be the biggest moneymakers. we'll start with gm. treasury announcing it will sell the rest of its stake in the automaker in the next year. earlier, we talked about the government's investment in gm. >> you have to recognize there are costs in this investment. you know, let's remember the costs are far less than the cost
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had we not acted. we have been successful overall with all the t.a.r.p. investments. all the t.a.r.p. investments considered as a whole will result in a gain to the taxpayer. >> big news for gm and the industry at large. phil lebeau is in chicago with more. >> you talk about the cost of how much the government put into general motors. $49.5 billion. now it is going to start to exit from general motors. here's the road map, if you will, for what the government will be doing with gm shares over the next year and a half. it will be exiting in an orderly fashion over the next 12 to 15 months. today, gm announcing it's going to be purchasing 200 million shares from treasury coming in at $27.50 a share. that's a 7.9% premium compared to where the stock was trading yesterday. the treasury selling those shares through various means. what are the practical implications of this move? well, one of the big ones the people at the headquarters in detroit are talking about is
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that no longer being controlled or owned by treasury to a certain extent means they can be more aggressive recruiting talent. remember, gm, as with other companies under the t.a.r.p. pay restrictions, that made it tougher to retain executives, to recruit executives. they believe that will change once t.a.r.p. restrictions are lifted. as for the other story line, if you will here, some people are saying, did the government make back all the money it put in? under president obama, the treasury department invested $49.5 billion between 2008 and 2009. if it were to break even, it would need to sell the remaining shares at $70 a share. that's not going to happen. there will be a loss of some proportion, whether it's $9 billion, $10 billion. remains to be seen. by the way, gm last closed over $27 a share back in february, carl. you see that bump we're getting today? we're looking at them potentially closing at a new 52-week high.
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>> yeah, and as he said, hopefully goes even higher in 2013. we'll certainly see. thanks so much. phil lebeau in chicago. talk about the fiscal cliff. things are looking a little worse and worse for that holiday break for congress, at least, as the president says he will veto house speaker boehner's plan b. our john harwood is live in washington. as i said earlier in the show, still stubbornly optimistic this gets done. >> i am, even though the trash talk keeps on coming, carl. just a couple moments ago, we got an e-mail from the boehner communications office calling the white house veto threat bizarre and irrational. again, this is in response to the plan b that boehner unveiled. let's just replay the bidding for a second. the sound of stalemate. you had the white house giving an offer to boehner a couple days ago that offered to raise taxes on people with incomes over, families with incomes over $400,000. had some spending cuts. boehner said it was not sufficiently balanced with spending cuts. he rejected the offer.
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he's come out with plan b, which doesn't have any spending cuts at all but would only raise taxes among people with incomes over $1 million, trying to take that issue off the table. the idea that republicans are protecting billionaires. now the white house has said, no, if that passes, which harry reid says it cannot pass, but if it does, we're going to veto it. so this is positioning, counterpositioning. everybody is striking a pose. still have private negotiations going on among staff. as i said, carl, when we talked a few moments ago, i remain optimistic that the fundamentals are in place for a deal. they're testing everybody's patience. >> it is a departure from at least a few days ago where there was the absence of any back and forth, right? there is that. >> well, you know, i talked to a republican member of congress yesterday afternoon who said that this is sound and fury you get before a deal. why does he say that? because they're exchanging offers. there's back and forth.
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the differences are getting narrower. that's a positive sign. that's where we are. the question is, you know, if you get the distance down to a very short amount between the two sides, can they bridge it? can john boehner sell the deal with his republican caucus? he met with leadership last night. met with his caucus earlier yesterday. can president obama push this through democrats, both in the house and the senate? i think the president's got a lot of leverage over democrats, and he's likely to be able to deliver a sufficient number. it's a tougher question for john boehner because so many of his members even want to vote against his plan b because they don't want to raise taxes on anybody. >> john, we'll talk to you in a while. thank you. meantime, the patriotic millionaires, that group of wealthy americans asking to be taxed more. democrats say that plan has no chance of passing. what do the millionaires themselves think?
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abbigail disney is a filmmaker and also the niece of walt disney. is this considered a victory, this idea that if you make more than $1 million you will pay more? >> it's a step in the right direction. definitely a big step in the right direction. i think we need more revenues than that's going to generate. it's going to have to drop below the $1 million mark. >> we've had a few from your group on the show. they are often received with a lot of hostility from people who are not millionaires themselves. >> yeah. >> why does that happen? >> you know, i can't say -- i can't explain it because i don't understand it myself. i think that there is a particular hostility to people who are willing to be traders to their own class. it's unique to our culture. you know, democracy is more than six wolves and a sheep voting on what to have for dinner. we have to represent more than the interests of our own selves and class in order to make sense
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of this big thing we call government. >> in talking to your group, the message seems to be we are willing to pay more, but not blindly and not for nothing in return. the journal today says giving more in taxes without this notion of cuts is foolish. how specific does your group want to see when it comes to reforms? >> we want to see a balanced approach when it comes to cuts and revenues. the cuts the republicans have offered are so gargantuan. this is something you can talk about as a right and wrong issue. you can be aspirational and talk about the moral -- but there's also a really important logical argument, which is these cuts are going to come on the backs of the middle class and working class in this country. we are going to kill the goose that lays the golden egg, which is our consumers and the very basis of all this activity around us. >> i imagine you must hear from people who are millionaires, who would be affected. they're just barely
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millionaires, right? they are responsible for a payroll or tax decisions affect their thinking at the margin, right? we got to draw the line somewhere. should they be included in this group? >> there was a big step when we moved from 250 to 400 as obama suggested. at 250, the small businesses would only represent 3% of the people affected by this. those decisions they're making, i mean, i don't know a lot of small business owners that are really making hiring and firing decisions on the basis of their marginal tax rates. >> finally, there's this feeling that the president wants the revenue, sure, but he wants it to be, quote, fair, which people have a problem with. is that how you see it? >> fair is such a squishy word. it's almost unfair how squishy the word is. there has been a grotesque divide in this country.
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it's grown in the last ten years. in many cases, it's a direct result of the tax breaks we got in 2003 under george bush. this is a really big step in the right direction in terms of making sense of income and wealth disparities in this country, which is the basis of building a much healthier economy for everyone. >> certainly going to make for some interesting dinner conversation this holiday season, i imagine, in your house. thank you for coming in. >> thanks so much. >> please come back. members of the justice department speaking out about ubs this morning and its $1.57 billion fine for rigging lie boar. straight ahead, we'll talk to the commissioner of the cftc about what happens next. speaking of which, rick santelli may talk about that and something else too, right, rick? >> absolutely. we're going to have adrian miller. he's with gmp securities. what we're going to talk about, hey, is india a standout in the emerging market arena? we'll talk about that, the bank of japan, and deflation is the big boogie man in the closet for most central bankers. but is it justified in the case
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of an export economy like japan? all that coming up in about a half hour. be there.
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let's get a market flash. brian sullivan is back at hq. >> i want to look at navistar. the problems there continue. that stock is down almost 6%. sales dropped 24% year over year. here's the problem. they changed their exhaust to meet new epa standards on diesel
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emissions. they did it differently than the other truck engine makers. they've had a push back on that, and the warranty claims are high. a lot of people are complaining about the engine. i have to give a victory lap to herb greenberg. he warned us about potential problems with their engines months and months ago. people are saying, hey, the engine isn't working as i wanted it. i want it fixed. a new ceo in august. he's trying to fix it. but a 24% drop in sales and warranty claims up. ouch. >> that's a good shoutout to herb who has been all over that story. thanks, brian. instagram ceo is trying to reassure users it will not be selling your photos after a change in the photo filter app's privacy policies caused a fire storm. what can settle the feud between twitter and facebook once and for all? bill writes, twit book, a place to post all the awkward tweets and creepy family photos.
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then mark write, apple buys them both. that would definitely settle everything. want to bring in drew, a writer for ted crunch. good morning to you. >> thanks for having me. >> is this much ado about nothing? do users have a real privacy gripe here? >> the thing with instagram is every since it was acquired by facebook, it's assumed that facebook's stance and their approach to privacy in terms of service -- i mean, it's been confusing in the past. they've tried to involve users in the governance of it, but not enough users came out and voted. >> yeah, it's been said that, you know, you try to lay out these privacy policies, and facebook's been a victim of this to some extent. the layman is going to read it differently than your own general council intended. is that what happened here? >> that's exactly what happened here. multiple things happened. and i wouldn't call facebook a victim. i think we've learned that most people, including myself for the
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most part, don't read terms of service and privacy policies. >> you just click "i agree." >> exactly. we want to move on and use a cool service. i think it's a company's responsibility to break it down for, as you put it, the layman. >> one other thing that sort of struck me in reading the statement from instagram is this rather explicit explanation that, you know what, we are here to make money in the long term. those of you may think of us as a public service or a public good, but we're going to monetize this somehow. our shareholders are beginning to demand it. >> that's true. if you're using anything on the internet for free, there's something implied that says this can become part of a business. the difficulty is these changes were rolled out. users got confused. they got confused because there was a group of users who thought, oh, they're going to sell our photos. they're going to sell them for $500 and they're no longer mine. never the case. that was never the case.
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what was the case is that facebook could use your photos from instagram as an advertisement. they could sell that access to marketers and companies. so you could show up as an advertisement for doritos, for example. >> who's going to win this war? who do you think has the advantage now? >> are you talking about a war between -- >> twitter and facebook. >> you know, i don't get involved in wars. i think -- >> you're a pass fist. >> twitter is making moves that i feel are better for users. they're trying to show you content using twitter cards. they're trying to give you a glimpse of content before you make that click. they value your clicks. instagram didn't feel that way. facebook didn't feel that way. they wanted you to click on a link on twitter rather than see the preview. that's their decision. is it good for users? i don't think so. >> yeah, we had aviary on the show not too long ago. they're providing the filters to twitter. just product for product, a
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taste test between the two, instagram or aviary. which service is better? >> i think what you just said is the smartest thing. there's choice. if you don't feel comfortable with instagram, you don't have to use it. twitter has options now. flickr is coming back and resurging. facebook does allow you to export your photos. it's commendable. but there's choice right now, which is good. >> that is usually how things work out best, drew. thanks for your time. great seeing you again. >> good to see you. thank you. bart chilton is going to join us after the break with his take on this libor settlement at ubs. first, let's get a sector check. tech and energy performing the best today. utilities and telecom are lagging. the dow still stubbornly close to the flat line, down five. back in a minute. [ male announcer ] with wells fargo advisors envision planning process,
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swiss bank ubs admitted fraud and accepted a $1.5 billion fine today in its role in manipulating global benchmark interest rates known as libor. bart chilton is the cftc commissioner. he joins us now. good to have you back. >> good to be with you. >> the granddaddy of penalties in your view, right? >> exactly. barclays this summer backed the highest settlement this summer. attorney general holder spoke a few minutes about that the $500 million from department of justice, this is $1.2 billion settlement with ubs. all too often, carl, we've talked about before that there have been puny penalties for financial firms. this amount, this in aggregate
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$1.5 billion from all regulators, including the swiss and the brits, that serious and significant and will serve as a definite deterrent for the megabanks and other financial firms. >> how much pain -- i know it's a lot of money, but they do escape prosecution. no individuals held to account. i mean, there are other things that could have been done to really get their attention. >> well, you know, i wouldn't -- never say never on the individual matter, carl. that's, you know, criminal prosecution is up to the folks with jurisdiction. you have to look at what might go on in other countries. i don't want to comment more on that. this is a serious and significant penalty. $1.5 billion, i think, is real money, even in the megabank world. ubs is the 20th largest bank in the world. $1.5 billion is a lot. i feel it will send a strong message. one of the things that bothered
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me most about this is they were so brazen. it's almost like these guys, a lot of the folks trading, they thought that having a conscience was nonsense. they were trading and continuing to try and manipulate the rates, even after we started investigating. so it's really a shame. these rates should never be compromised. i hope this sends a resoundsing message. don't mess with markets. >> right. speaking of practices versus practices, our john carnegie tweeted earlier this morning that barclays was like corking the bat. ubs was like the black sox scandal. i wonder if you make differentiations like that too. >> the bottom line is barclays was attempted manipulation. ubs was manipulating. they moved the markets. over 2,000 times, carl, did they try to do this. over 2,000 times. i think too often people forget how important all of the libor
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interest rates and the related interest rates are. they impact about everyone in the world, purchases on credit. we nevercompromised. this leads to the question for me of whether or not libor, whether or not the energy benchmark rates in the u.s. are set in a way that make sense. on my radar is what do we do to reform these things in the future so that they're good for consumers? >> you do say the entire regime needs to be revisited. what's that going to look like in two or three years? >> well, you know, i'm just one guy, of course, but for me you should never have a profit motive in setting up these benchmark interest rates. they're just too important. one of the ways that we can have more clarity to them is to ensure that they are based upon real trades and there's transparency. from my perspective, i never want to be thwarted in our investigative role from getting
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information from whoever is setting these benchmarks. we've had that in the past in the u.s. where we've tried to come to the bottom of what we think is manipulation with regard to a case several years ago. what happened was we were denied the information on a first amendment basis. so that's something we also need to consider and look into to ensure these rates are good, not just for markets, but good for consumers. >> yep, we are all counting on it. commissioner, thank you so much for your time. good to see you. >> good to be with you. >> bart chilton of the cftc. markets in europe about to close here. we'll get the details on that in a couple moments and what it might mean for our afternoon session. plus, 108 ipos priced this year. what about next year? more on that later on. try running four.ning a restaurant is hard, fortunately we've got ink.
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the european markets are closing now. >> yes, they are. as we look at a sea of green touching some fresh highs for the year after german business sentiment rose for a second consecutive month. greece gets an upgrade five notches by s&p as well. looking at the major markets today. look at london, paris, italy, frankfurt, and spain. green arrows across the board. the euro off its highs of the session but at one point was above $1.33.
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british banks look particularly appealing here, due in part to signs of resilience in u.k. gdp growth. so we've had the european close. meantime, bob joins me here at post nine with a look at not just europe but what we're doing here state side. >> sort of moving sideways and consolidating. a little news on night capital. just got off the phone with tommy joyce, who is now the executive chairman. take a look at night here. remember the deal. they've sold. they sold to geico here. a rather complicated deal. a two-to-one cash to ratio stock. again, i did talk to tommy. he said he'll be working there on a daily basis. none of these absent chairman things. he's going to be a hands-on guy. certainly a relief to everyone. everyone wants tommy joyce involved in their business. dan coleman will be spending half his time in chicago and half his time in jersey city.
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very interesting dynamic going on here. sort of a working partnership between the two of them. tommy insisted to me this is a complementary merger. that is true. given it's $720 million or so, how are you going to pay for it? are they going to sell any part of the units? how about the electronic execution unit? they declined to comment on that. although, dan did say the electronic execution was a fabulous business. those are his words. again, there you see night capital long term. let's move on, talk about what some are calling the goldilocks situation. have you noticed what's been going on? the s&p 500 at a two-month high. close today. the euro is at an eight-month high. germany at a five-year high. gold near a four-month low. bond funds, long-term bonds, two-month low here. here's this goldilocks scenario. moving to a greater clarity on taxes is going to help. europe is showing determination to stay together. china is bottoming. corporate balance sheets are in
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good shape. on the other side of it are people who say this is all a lot of nonsense, all a lot of fantasy about 2013 because they're trying to set up to argue why. here's the bear position on why things are rather difficult right now. bottom line is you cannot get strong growth without rising taxes and lower spending. this is the austerity situation. you can't have unlimited stimulus that is not going to cause inflation. so there's a big fight going on about what's happening here. again, some unusual positioning around selling bond, selling gold, buying equities recently. maybe a little allocation going on. let's talk about -- quickly, i want to show you the homebuilders here today. a lot of people were speculating. new lows in the end, that's going to be a major factor. thursday you're going to see the bank of japan, more stimulus measures and a weaker yen are coming. there's a little weakness today. that's been your leadership group throughout the year. >> absolutely. thanks, bob. see you later. something called a wealth management product has gone bust in china, making headlines across the country and leading to protests outside a bank in
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shanghai. is this the canary in the coal mine for a chinese banking crisis? our michelle michelle caruso-cabrera is here with more. >> we're absolutely raising a red flag about a potential blowup within the chinese banking system. a financial product sold to investors in shanghai last year which was supposed to pay interest between 11% and 13% in one year, when it came due in late november, investors got zero, nothing. they lost both principle and interest. $22.5 million worth in total. the money was supposed to be invested in a pawnshop, two car dealershi dealerships, and entertainment venue. the investors who claimed they were told the product was risk free protested in front of the bank for days. those protests made headlines across the country. analysts believe this is the first time this type of product known as a wealth management product or a wmp has gone bust and so publicly. wealth management products are
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wildly popular in china because investors get higher interest rates than from savings accounts or cds. remember, the government controls interest rates in china. right now they're below the rate of inflation. chinese investors are desperate for yield. fitch estimates more than $2 trillion worth of them in the chinese system, which is a huge increase from last year. wmps are almost always short term. maybe a few weeks, maybe a few days. some are very safe, invested in solidly run businesses. but increasingly risky and speculative ones are being sold to meet demand. reporters at reuters looked at paperwork for 50 of these. the vast majority didn't say what the money was for. why do we care? the worst case scenario, if chinese investors get spooked and stop buying these. loans to small and medium businesses fall off sharply. that's a recipe for a slowing chinese economy, not good news for us. you can read a lot more about the implications on cnbc.com.
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>> michelle, it's coming at a time where they have new leadership over there. everybody is hoping for the liberalization of reforms. does it feel to you like it is an outlier or maybe the beginning of something new? >> i think this could be something that could turn into something very, very big. a lot of people are watching this on wall street. the reforms would help, if they didn't set interest rates too low, if they let the markets drib distribute loans, you'd lose demand for these products. >> thank you so much michelle caruso-cabrera. for better or worse, facebook may stand out another this year's big ipo. check out these companies. could one of them be making a big debut next year? dennis berman is editor at the wall street journal. hard to have this conversation at the gate without talking about twitter, right? >> you got to think 2013 has got
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to be the year that twitter ipos. we're seeing the terms of service, all the stuff people are talking about. twitter wants to be a business. those are the steps that are necessary to actually stage an ipo so you can show a revenue stream so people want to buy your shares. i think we have to pencil in, probably a pretty strong pencil, that 2013 is the year twitter ipos. >> you also want to talk about hilton. >> there are a number of companies that were purchased by private equity firms at the tail end of the bubble. right now i can kind of picture that scene in the "monty python" movie where they're like, bring out your dead. there are companies they want to ipo. companies like hilton. you have to think, 2013, six years since they were originally purchased by the private equity sponsors. probably time for them to try, at least, to get those companies
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out into the public markets. there are a number of them that have tried already, like toys r us. you maybe had them on the other day. >> yesterday, in fact. >> that thing is stuck. it ain't going anywhere. those are the types of things that the private equity firms want to get out in the market. >> toy was public, went private. now we talk about it going public one day again. you put that in a group along with via of names that could go if the economy is strong enough. >> my colleague and i, we talked about this. he says if the economy is really great, then maybe these things get out there. ment but a via, a low-growth business right now, purchased at the top of the market. so many of those privately backed companies that are just stuck. we've seen so many companies stage ipos not to raise money but to pay back debt on their private equity buyouts. >> there's a large group of names.
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etsy, gilt, square, along with big data, names that we have expected to go public maybe this year that did not. >> this is where it gets exciting. these companies are pretty exciting. they're doing interesting things. what's really, i think, the fun part about trying to game out something like an etsy or a drop box is how do those valuations square with what the venture capitalists are valuing them at now? we've seen with facebook the reality that the market just probably is not going to accept the valuations that the vcs want to put on these companies. yes, i think there probably is a market for an etsy. probably in the realm of like a yelp. there probably is a market for b & b, which doesn't have an inventory of hotel rooms. it can be a broker for people who want to do travel anywhere around the world. the question is, how does that square up with the vcs want on their price. >> i'll tell you what, i want to
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be down here when five guys burgers goes public, if that happens. thanks again. >> good to see you. >> we recently caught up with one of the companies on dennis' ipo watch list. that is epsy. the ceo spoke about the company's record breaking holiday season. >> the holiday is going really great. we had one of our biggest growth weekends ever over cyber monday. our growth actually accelerated year over year over last year. as we close november, etsy had a $100 million month for the first time. things are going really, really well. we're breaking all records, and more sellers are making a sale than ever before. >> the ceo of etsy, chad dickerson. in just a few moments, the president will make a statement on gun control and possible new policies after the wake of the shooting in newtown, connecticut. we'll bring you the comments live when we come back. well, if it isn't mr. margin. mr. margin?
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don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know. ...so as you can see, geico's customer satisfaction is at 97%. mmmm tasty. and cut! very good. people are always asking me how we make these geico adverts. so we're taking you behind the scenes. this coffee cup, for example, is computer animated. it's not real. geico's customer satisfaction is quite real though. this computer-animated coffee tastes dreadful. geico. 15 minutes could save you 15 % or more on car insurance. someone get me a latte will ya, please?
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welcome back. coming up on "halftime," the great rotation out of treasuries and into stocks. we have the best plays if the bull run in bonds is in fact over. europe versus the u.s. which is the top trade in 2013? the answer may surprise you. and can fedex continue to deliver for shareholders? two traders, two opinions. one heated debate at the top of the hour. >> sounds good, scott. thanks. in the days following the tragic shooting in newtown, connecticut, retailers have been
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considering their policies regarding the sale of semiautomatic rifles. courtney reagan has been following the story. >> hi, carl. as the gun debate rages on, retailers that legally sell firearms have elected whether or not to sell guns. so far p dick's sporting goods is the only major retailer to assert it has made changes. they said out of respect for the victims and their families during this time of national mourning, we have removed all guns from sale and store. walmart tells cnbc it has not made any changes in the wake of the tragedy. bass pro shops has no comment. we've left messages with gander mountain and have not received response from cabela's. shares have fallen 11% since friday's tragedy. the number of background checks have already hit a record high in 2012 of 16.8 million. that excludes the month of
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december. the fbi notes a one-to-one correlation cannot be made between a firearm background check an an actual firearm sale. gun maker sales have increased in the most recent quarter. smith and wesson sales increases. analysts have spoken to -- actually, i think the gun debate will benefit gun retailers in the near term. fear of changing legislation appears to have caused a surge in demand in november. the latest fraj i did is expected to further increase demand for guns, though they are a relatively low margin product for the retailers. >> interesting and very strange to watch the stock suffer, even as sales are going up. thank you for that. by the way, we are waiting for the president. there's the look at the briefing room. he's going to speak on gun control at any moment. a statement on the policy process that the administration will pursue, they say, in the wake of the newtown tragedy.
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we'll see if we see the vice president there as well leading a task force on exploration of policy. in the meantime, the bank of japan concludes its two-day policy meeting tomorrow and is widely expected to announce yet another round of easing, rick santelli. you got to have some thoughts about that. >> absolutely. and so many different ways to go. remember, with the election, i was joking earlier in the christmas spirit saying, you know, if you're a monetizer in japan, it's your abe time, i guess. i'd like to welcome our guest adrian miller from gmp securities. let's talk about the bank of japan, sir. i guess my question to you is, it isn't any surprise that they're moving down this road, you know, weakening their currency in export economy. even though we're at 20-month highs in the dollar versus the yen, take that chart back a few years, and you can see we're
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making up from low levels. what are your thoughts? >> -- >> listen, we have a sound problem. we're going to have to try to rectify it and come back. carl, i apologize. >> we'll work on that, rick. thank you for that. it has been a big week for crude oil. after the break, we'll go live and see if there are anymore games to come. we'll be right back. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. we don't let frequent heartburn come between us and what we love.
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welcome back. again, the third hour of "squawk on the street." we have our problem fixed. welcome again, adrian. >> thanks, rick. >> let's go bank of japan. tell me your thoughts. >> right. i think with the mandate given as a result of that landslide victory, you can't be surprised by this pedal to the metal type of approach they're going to embark on, both on the fiscal side and hopefully on the monetary side. we reached out yesterday, asking to raise the inflation rate to 2%. a little lower than his rhetoric in the previous election at 3%. still, it does put the bank in a difficult position because he's more or less somewhat of a hawk, which is up your alley, rick. >> absolutely. >> so he's got to now handle this political pressure. previously, he's been pretty good at pushing back at the political pressure. i think at this point, he's probably going to, you know, increase stimulus. it's debatable as to how much.
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it's even debatable as to how much this is actually going to help, you know, japan's growth and so forth because they have a lot of structural issues to overcome. i think on the fiscal side, they're going to probably do a lot of infrastructure spending that will help them get over some of the earthquake damage and tsunami damage and so forth. how much it actually moves the needle on growth, especially with the debt levels they have, is going to be challenging to say the least. >> all right. adrian, we're going to be showing a chart while you and i are talking. this is japanese unemployment rate. it's currently 4.2%, the lowest in several years going back to a 4.1%. it's been there for several months. my contention is, you know, we always say that the bank of japan is doing this to raise -- you know, they want to eliminate deflation, move into inflationary. we've heard it a million times. my question to you, though, let's go off the grid a minute. 4.2 unemployment, not too bad. if you consider it's an export economy, not a consumption economy, tell me exactly why
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it's so bad to have a little deflation so basic middle class japanese pay less for their goods and services? what's wrong with that? >> nothing. you know, deflation is fine. they got to get that economy going. the only way they're really going to do that, i think, on the longer term per specti -- perspective is to weaken that yen. they need to lift the exports in order to drive that growth. the only problem is -- >> i'll tell you what, if you're in europe and looking at the way the dollar is flying against the yen, especially germany, also in an export economy, i think this is going to be a big setup for a little confrontational export tariffs or issues. we have to run, adrian. always a pleasure, sir. >> thank you. >> thanks so much, rick. rick santelli in chicago. in a few minutes, the president will make a statement on gun control and potential new policies in the wake of the
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shooting in newtown, connecticut. that's a live shot of the briefing room. we'll get you nose comments live when they happen. we're back after a break. i always wait until the last minute.
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can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery. still waiting for the president to speak in the
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briefing room about the policy process of gun control in this country. the exploration of that by the white house and the administration. he's about ten minutes late. of course, when he talks, we'll take you there immediately live. in the meantime, let's bring in our chief washington correspondent john harwood as we wait for the president to start speaking. john, we're in a weird space where the market is craving any kind of information related to the fiscal cliff. that's clearly not what he's going to address right now. >> no, and if he addressed the fiscal cliff, the market probably wouldn't like it because we're not in a good place at the moment. what the president is going to try to do is take a step forward on finding new policies with respect to mental illness, gun control, all the spectrum of issues that factor into the newtown tragedy and try to have vice president biden, who's going to head a task force of the administration, come up with some recommendations and we'll see where he takes it. we already had senators talk about introducing the assault
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weapons ban. diane feinstein wants to reintroduce that. she passed it in the clinton administration. there are bills related to types of ammunition, what you do about mental health, violent video games. all that sort of thing is on the table. this gives the president a little breathing room and space. of course, he's got a huge issue to deal with with republicans in terms of debt deficits and the fiscal cliff. joe biden will get to work on coming up with the next steps on this issue. >> i keep thinking back to what mayor bloomberg said over the weekend on "meet the press." that is, in this instance, he thinks the president should not just go to congress and say, guys, what do you have for me in the way of legislation? rather, lead on this issue. the announce of the task force was met by some with some derision. >> it can be a bit of a punt. i do think we see from the demeanor and tone of the president, someone who was
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impacted in a significant way by what happened, was reacting as a parent, as a politician who was chastened by his own timidity on this issue in the past. he's in favor of the assault weapons ban, hasn't done anything about it in the early part of his administration. democrats generally speaking have been shying away from this issue because they determined it was toxic for them politically. now you had a kind of look in the mirror moment after what happened in connecticut with democrats now saying can we really justify this to ourselves? i think the president shares that feeling. >> interesting. not often, john, that you see a private equity firm like cerberu sur s on the cover of a new york tabloid. they're going to make a statement on friday. we're getting a two-minute warning, by the way. on friday, the

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Squawk on the Street
CNBC December 19, 2012 9:00am-12:00pm EST

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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